RTX Corporation (NYSE: RTX)

RTX’s second quarter 2025 results demonstrated strong operational performance with sales of $21.6 billion, representing 9% growth both on a reported and organic basis. This growth was broad-based across all three segments, with particularly strong performance in commercial aftermarket which grew 16% year-over-year. The organic growth excludes the impact of divestitures, highlighting the underlying strength of RTX’s core operations.

GAAP EPS reached $1.22, a significant improvement from $0.08 in the prior year, though it included $0.28 of acquisition accounting adjustments and $0.06 of restructuring and other items. On an adjusted basis, EPS was $1.56, up 11% versus the prior year, demonstrating RTX’s ability to drive profitable growth despite operational challenges including the four-week work stoppage at Pratt & Whitney.

Operating cash flow was $0.5 billion in Q2 2025, down from $2.7 billion in the prior year, primarily impacted by the work stoppage at Pratt & Whitney and working capital dynamics. This resulted in a free cash outflow of $0.1 billion after capital expenditures of $0.5 billion, though management confirmed their full-year free cash flow guidance of $7.0-7.5 billion remains intact.

The company’s backlog reached a record $236 billion, up 15% versus the prior year, including $144 billion in commercial and $92 billion in defense. The strong book-to-bill ratio of 1.86 demonstrates robust demand across both commercial and defense end markets, providing significant revenue visibility for future periods.

RTX returned $0.9 billion of capital to shareholders during the quarter and raised the quarterly dividend by 8%, demonstrating the company’s commitment to shareholder returns while maintaining financial flexibility for growth investments and strategic initiatives.

Collins Aerospace delivered sales of $7.622 billion, up 9% year-over-year, with strong performance across commercial aftermarket (+13%), defense (+11%), and commercial OE (+1%). The increase in commercial aftermarket was driven by continued growth in commercial air traffic, while defense sales benefited from higher volume across multiple programs including F-35 and the Survivable Airborne Operations Center program. Adjusted operating profit of $1.249 billion was up 9% with a healthy margin of 16.4%.

Pratt & Whitney achieved sales of $7.631 billion, up 12% year-over-year, despite the impact of a four-week work stoppage during the quarter. The growth was driven by a 19% increase in commercial aftermarket and a 15% increase in commercial OE. Commercial aftermarket benefited from higher volume in Large Commercial Engines and favorable mix in Pratt Canada, while commercial OE growth was driven by favorable mix in Large Commercial Engines. Adjusted operating profit of $608 million was up 13% with an 8.0% margin.

Raytheon posted sales of $7.001 billion, up 8% on a reported basis and 6% on an adjusted basis. Growth was driven by higher volume on land and air defense systems, including international Patriot and NASAMS, as well as higher volume on naval programs including SPY-6 and Evolved SeaSparrow Missile. This growth was partially offset by lower development program volume. Adjusted operating profit of $809 million was up 14% with an 11.6% margin, driven by favorable program mix and higher volume.

All three segments demonstrated strong operational execution, with Collins and Pratt & Whitney benefiting from the recovery in commercial aviation and Raytheon capitalizing on robust defense demand globally. The segment results highlight RTX’s balanced portfolio across commercial and defense markets, providing diversification and growth opportunities.

Operating margins remained healthy across all segments, with Collins maintaining its strong 16.4% adjusted operating margin, Pratt & Whitney at 8.0%, and Raytheon at 11.6%. These margins reflect effective cost management and operational efficiency despite inflationary pressures and supply chain challenges affecting the broader aerospace industry.

RTX’s backlog reached a record $236 billion at the end of Q2 2025, representing a 15% increase versus the prior year. The backlog composition includes $144 billion in commercial orders and $92 billion in defense contracts, demonstrating the company’s strong positioning across both end markets.

Backlog Composition and Growth Drivers

• Commercial Backlog ($144B): Driven by strong demand for geared turbofan engines, commercial aircraft systems, and aftermarket services as air traffic continues to recover and grow globally
• Defense Backlog ($92B): Supported by continued demand for integrated air and missile defense capabilities, combat aircraft systems, and military engines amid heightened global security concerns
• Book-to-Bill Ratio of 1.86: Indicates strong order intake significantly exceeding sales, providing excellent revenue visibility and growth momentum
• International Growth: Significant portion of backlog includes international orders, particularly for Patriot air defense systems and commercial aircraft systems

The strong backlog growth was supported by major awards secured during the quarter for geared turbofan engines and integrated air and missile defense capabilities. The company’s Pratt & Whitney GTF engines continue to gain market share due to their fuel efficiency advantages, while Raytheon’s defense systems benefit from increased global defense spending.

Commercial aftermarket demand remains robust, with 16% growth in Q2 reflecting both increased flight hours and aging aircraft requiring more maintenance. This trend is expected to continue as airlines focus on maximizing utilization of existing fleets while managing capital expenditures carefully.

The defense portion of the backlog reflects strong international demand for proven systems like the Patriot air defense system, driven by geopolitical tensions and allies’ desires to strengthen their defense capabilities. RTX’s advanced technologies and established customer relationships position the company well to capture additional defense opportunities.

RTX updated its full-year 2025 outlook to reflect strong first-half operational performance while incorporating the expected impact of tariffs and changes associated with recently enacted tax legislation:

Revised 2025 Guidance

• Adjusted sales of $84.75-85.5 billion, increased from previous guidance of $83.0-84.0 billion
• Organic sales growth of 6-7%, up from previous guidance of 4-6%
• Adjusted EPS of $5.80-5.95, down from previous guidance of $6.00-6.15
• Free cash flow of $7.0-7.5 billion, confirming previous guidance

The increase in sales guidance reflects the strong operational performance achieved in the first half of 2025, with all three segments performing ahead of expectations. The organic sales growth increase demonstrates RTX’s ability to capture market opportunities in both commercial and defense markets.

The reduction in adjusted EPS guidance primarily reflects the incorporation of tariff impacts and tax legislation changes rather than operational underperformance. Management indicated that the company is actively working to mitigate tariff impacts through operational changes, supplier diversification, and pricing actions where possible.

The confirmation of free cash flow guidance at $7.0-7.5 billion demonstrates RTX’s strong cash generation capabilities despite the work stoppage impact in Q2. The company expects cash flow to strengthen in the second half as operational disruptions normalize and working capital dynamics improve.

CEO Chris Calio noted: “Our updated outlook reflects strong operational performance in the first half and incorporates our current assessment of the impact of tariffs. We are focused on delivering on the strong growth in our commercial and defense end markets and remain well positioned to drive long-term profitable growth.”

RTX continues to execute on several strategic initiatives to drive long-term growth and operational excellence:

Technology and Innovation

• Geared Turbofan Engine Leadership: Continued market share gains for GTF engines due to superior fuel efficiency and environmental performance
• Advanced Defense Systems: Development of next-generation air and missile defense capabilities, including hypersonic defense technologies
• Sustainable Aviation: Investment in technologies supporting the aviation industry’s decarbonization goals, including sustainable aviation fuels and hybrid-electric propulsion
• Digital Solutions: Expansion of digital services and predictive maintenance capabilities across commercial and defense markets

Portfolio Optimization

• Reached agreement to sell Collins’ Simmonds Precision Products business for $765 million, continuing portfolio optimization efforts
• Focus on higher-growth, higher-margin businesses aligned with long-term market trends
• Strategic investments in advanced manufacturing capabilities and supply chain resilience

Operational Excellence

• Resolution of Pratt & Whitney work stoppage with focus on returning to normal production levels
• Supply chain diversification efforts to reduce risks and improve cost competitiveness
• Continued focus on quality, delivery, and cost performance across all segments

RTX’s strategic initiatives are designed to capitalize on long-term growth trends in both commercial aviation and defense markets while building operational resilience and technological leadership. The company’s investments in next-generation technologies position it well for future market opportunities.